Performance
01
Performance Management
Overview
For most businesses, performance reviews are an important way of promoting positive workplace culture, productivity, career development and reducing staff turnover rates.
The performance review process includes setting clear and specific goals or performance expectations for each employee and providing ongoing feedback about that employee’s performance (either informally or through a formal process).
Performance reviews are an excellent proactive tool available to employers to support the businesses overall strategic decisions and goals. However, performance reviews can also be an effective reactive tool to deal with employees who are underperforming or failing to live up to expectations. In this sense, it is important to distinguish performance reviews from performance management, with the former being an employee-wide process designed to enhance employee output, whilst the latter is a disciplinary tool designed to bring employees back up to speed.
Employee Performance Reviews and Performance Management
Performance management is the process that employers can use to deal with employees who are underperforming or failing to meet the clearly defined expectations of their employer.
Generally speaking, employers will need to demonstrate a process of performance management prior to dismissing an employee for underperformance. Failing to do so could render the dismissal unfair and create risks for the employer if the employee lodges an unfair dismissal claim.
The process that should inform any decision to dismiss an employee for underperformance will vary from workplace to workplace, and even from employee to employee. Nevertheless, the process that is followed should always adhere to a few basic principles:
Procedural Fairness:
Often referred to as ‘natural justice’, the concept of procedural fairness dictates that employee’s should be clearly told:
-
What the employers’ expectations are of them;
-
What they are doing or not doing that is inconsistent with those expectations;
-
What they are doing or not doing that is inconsistent with those expectations;
-
What they are doing or not doing that is inconsistent with those expectations;
-
That they may be dismissed if they fail to improve.
Punishment needs to fit the crime:
Anecdotally, some employers refer to the “three strikes policy” of warnings. In other words, three written warnings and you’re out. This, as a guideline, is flawed. The disciplinary response to underperformance should be more nuanced and should reflect the severity of the underperformance. For example, a salesperson who misses out on a difficult sales target by an insignificant amount, should not be treated the same as a salesperson who achieved nothing at all in the same period.
Document everything:
Informal performance management can be exceptionally effective in dealing with minor of infrequent performance issues. Nevertheless, many employers fall into the trap of handling all performance issues ‘informally’. It is important to identify when it is appropriate to escalate an issue from the informal to the formal. This should be reflected in how you handle the matter. Either way, it is important that employers are documenting the processes that they are following as they may later be required to demonstrate that a dismissal was not harsh, unjust or unreasonable.
Employers who do not have a performance management system in place in their business should look at developing a framework or procedure to guide the management of underperforming employees.
Performance and Wage Reviews
Performance reviews are proactive measures designed to enhance the capability of the broader workforce. A review process should be a formal process that occurs periodically (every year or six months for example).
The specific review process will change from industry to industry, from business to business and even from department to department.
Nevertheless, the following things are important elements for any review process:
-
Position Descriptions:
This ought to be in place at the commencement of any employment period. However, often small businesses overlook this important document, relying instead on general understandings of the role, or verbal instructions. If you don’t have a position description in place for every employee, then this is the starting point. When a performance review commences, the best starting point is often a review of the fundamentals of the role. In other words, start with the position description before looking at the other periodic or targeted goals that may have been set.
-
Goal setting:
Goals should be set at the conclusion of each performance review and reviewed during the next performance cycle. Goal setting is important, yet often misunderstood. The best goals or targets are SMART goals.
-
Specific:
Specific and narrow goals work best, rather than broad-sweeping statements)
-
Measurable:
Define what evidence will show improvement. Improvement should be able to be measured and tracked.
-
Achievable:
Make sure that goals are realistic and able to be reasonably accomplished
-
Relevant:
The goals should align with the business’s values, strategies and objectives and relate to the person’s work; and
-
Time Based:
Set a timeframe for the goals to be achieved
-
Review and Evaluate:
Having expectations and goals are excellent starting points, but in order to give effect to them the business needs a system for reviewing and evaluating them. This should be done in a structured way, following a plan that will apply to all employees in the business or department. It is not effective to simply ‘do it on the fly’.
If you don’t have a performance review system in place and would like to develop one that is suitable for your business, contact Clyde Industrial today.